Coal Gasification Startup Laurus Energy Raises Funds

Helping to produce more coal to run turbines and power plants sure doesn’t sound like a clean aim, but a startup called Laurus Energy says its coal gasification technology can produce a gas that releases less carbon when burned than natural gas and costs between $2 and $3 per unit — about half the price of natural gas these days. And the promise of a cheaper, cleaner-burning fossil fuel has attracted just shy of $10 million in Series A investment from Mohr Davidow Ventures, the companies announced Tuesday morning.

Laurus’ technology, called Underground Coal Gasification, turns coal deep in the earth into syngas. The syngas is extracted and sold to be used for power generation; meanwhile the carbon emitted during the gasification process can be sold to enhanced oil recovery companies (there’s fossil fuel all over this green business model). Erik Straser, a partner with Mohr Davidow who led the investment, says the idea is to use natural gas — which he calls the champagne of fossil fuels — for necessary processes like home cooking, and use cheaper coal syngas for power production in turbines.

Another aspect that interested Straser is how cheaply the Laurus process can gasify the coal underground. Straser says the company hadn’t pursued any surface gasification processes, which could be on the order of, say, $2 billion, but that Laurus can do the equivalent in the coal seam for one twentieth of that price. He adds that since the underground gasification process leaves char and other “really nasty stuff” in the ground, it’s a cleaner process than extracting coal and gasifying it above ground.

Environmentalists, though, will be all over the fact that Laurus’ process also enables coal that couldn’t be mined to be extracted via gasification. Straser says it could add access to up to nine times more coal reserves than available to traditional means. Can helping add more coal to the power generation supply ever be a green idea? Even if the coal gas emits less carbon than burning natural gas? It’s not great, but it could be a first step toward reducing power plant emissions.

The 3-year-old Laurus’ underground gasification technology actually stems from Montréal-based Ergo Exergy, which has commercialized underground coal gasification projects in India, South Africa, Australia and Uzbekistan. The founder of Ergo Exergy, Michael Blinderman, is also co-founder of Laurus, along with Simon Maev. Laurus has an exclusive license to use the technology in North America.